Run rate is an estimate of how many days of inventory remain before a product goes out of stock, assuming it continues selling at the current pace.
It helps you understand how quickly items are moving and when you need to restock to avoid going out of stock.
How it works
To calculate run rate (in days), divide your current inventory by the average daily sales.
Run Rate (days) = Current Stock ÷ Average Daily Sales
- High run rate means that your inventory will take longer to go out of stock.
- Low run rate means that your inventory will not last as many days before going out of stock.
- If your run rate is 0, either this product is not making any sales or there is no stock remaining.
Seasonality and promotions can skew run rate.
| Product | Current Stock | Avg Daily Sales | Run Rate (Days) |
|---|
| T-Shirt | 100 | 10 | 10 |
| Sneakers | 50 | 5 | 10 |
| Hoodie | 75 | 15 | 5 |
| Hat | 30 | 3 | 10 |
Why run rate matters
- Prevents stockouts
- Improves replenishment planning
- Helps prioritize fast-selling products
- Supports better demand forecasting
